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Why Do Studies Disagree on How Health Affects Economic Growth—and What Does That Mean for Public Policy?

Health is widely recognized as a driver of economic growth, but research findings on its true impact vary significantly depending on the approach. This paper, by CID Faculty Affiliates David E. Bloom and David Canning and their co-authors, Rainer Kotschy, Klaus Prettner, and Johannes Schünemann, tackles a long-standing puzzle why macroeconomic studies often find much larger (or smaller) effects of health on economic growth than microeconomic analyses. Using a harmonized framework, the authors reconcile these discrepancies and show that when conceptual differences—particularly indirect effects—are properly accounted for, macro-based and micro-based estimates of the economic return to health are in fact consistent with one another.

Key Findings:

• The puzzle: Macro-based estimates of the return to health vary widely: sometimes near zero, sometimes many times larger than micro-based estimates. This discrepancy arises because macro models typically include indirect effects (on education, fertility, and saving), while micro models isolate only direct wage effects.
• Unified framework: The authors develop a macroeconomic model grounded in Mincerian wage equations, enabling direct comparability with micro-level studies. They estimate this model using data from 133 countries over 50 years.
• Converging estimates: A 10-percentage-point increase in adult survival rates raises labor productivity by 10.6%—within the 6.7% to 13.4% range predicted by micro-based calibrations from . This convergence resolves the “micro–macro inconsistency.”
• Stability and robustness: The results hold across developing and advanced economies, time periods, and model specifications, and remain robust when adjusting for inequality, institutions, and demographics. 

Impact and Relevance:

This study addresses an important puzzle: why macro-level estimates of the return to health investments have often contradicted micro-level evidence. By harmonizing the conceptual foundations of these two approaches, the authors show that health’s direct productivity effects are substantial and consistent across scales. This breakthrough not only settles a methodological debate but also strengthens confidence in using individual-level data to inform macroeconomic policy design, a key validation for cost-effectiveness analysis in global health policy.

The implications for public policy are significant. Health is often treated as a moral or humanitarian concern, but this paper reaffirms its role as a core economic input. It shows that even without accounting for indirect effects, health improvements (such as vaccination programs, maternal health initiatives, and infectious disease control) can raise productivity in measurable, predictable ways. This strengthens the case for prioritizing high-return health interventions in national budgets and international aid strategies. It also suggests that improving adult survival may be as important for long-run income growth as traditional drivers like education or infrastructure.

More broadly, the research repositions health as not merely a component of human capital, but as an essential determinant of economic development. It emphasizes that growth policy must take health seriously not only for equity reasons but because sustained growth depends on it. By offering a rigorous reconciliation between two major strands of empirical work, the study provides a bridge between microeconomic evaluation and macroeconomic strategy: enabling better-aligned, evidence-based policies in both health and economic planning.